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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan NV was -0.52. The lowest was -4.35. And the median was -2.47.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan NV for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.3768||+||0.528 * 0.9732||+||0.404 * 0.95||+||0.892 * 1.1797||+||0.115 * 0.8344|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0501||+||4.679 * 0.0009||-||0.327 * 0.7327|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,861 Mil.|
Revenue was 2371.7 + 1871.7 + 2082.7 + 2084 = $8,410 Mil.
Gross Profit was 1008.1 + 830.1 + 969 + 1012.4 = $3,820 Mil.
Total Current Assets was $7,891 Mil.
Total Assets was $22,795 Mil.
Property, Plant and Equipment(Net PPE) was $1,899 Mil.
Depreciation, Depletion and Amortization(DDA) was $736 Mil.
Selling, General & Admin. Expense(SGA) was $1,891 Mil.
Total Current Liabilities was $5,369 Mil.
Long-Term Debt was $5,890 Mil.
Net Income was 167.8 + 56.6 + 189.2 + 499.1 = $913 Mil.
Non Operating Income was -2 + -18.5 + -38.1 + 1.5 = $-57 Mil.
Cash Flow from Operations was 114.7 + 267 + 126.6 + 440.7 = $949 Mil.
|Accounts Receivable was $1,762 Mil.
Revenue was 1837.3 + 1715.6 + 1808.526 + 1767.426 = $7,129 Mil.
Gross Profit was 808.8 + 737.8 + 795.951 + 808.518 = $3,151 Mil.
Total Current Assets was $4,477 Mil.
Total Assets was $15,603 Mil.
Property, Plant and Equipment(Net PPE) was $1,756 Mil.
Depreciation, Depletion and Amortization(DDA) was $533 Mil.
Selling, General & Admin. Expense(SGA) was $1,527 Mil.
Total Current Liabilities was $2,601 Mil.
Long-Term Debt was $7,918 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2861.2 / 8410.1)||/||(1761.6 / 7128.852)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(830.1 / 7128.852)||/||(1008.1 / 8410.1)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (7891.4 + 1899.3) / 22794.6)||/||(1 - (4477.1 + 1755.8) / 15602.8)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(533.418 / (533.418 + 1755.8))||/||(735.9 / (735.9 + 1899.3))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1891.3 / 8410.1)||/||(1526.673 / 7128.852)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((5890.4 + 5369.4) / 22794.6)||/||((7918.2 + 2601.3) / 15602.8)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(912.7 - -57.1||-||949)||/||22794.6|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan NV has a M-score of -1.94 signals that the company is likely to be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan NV Annual Data
Mylan NV Quarterly Data